Starting an insurance company can be a successful proposition, providing all proper steps are taken and necessary certifications obtained. Many people looking to start their own insurance business become registered agents for established companies, but there are others who prefer to start their own company, which requires specific resources.
Business Planning
It is important to create a detailed business plan before attempting to start an insurance business. This will outline what kinds of insurance you plan to offer, what states you intend to work in, how much manpower you think you will need to start and what kind of start-up budget you require. According to StartUpBizHub.com, the start-up costs for an insurance company can top $1 million. Your business plan will also be essential in helping you secure the funding to get started. You need to get a DBA (doing business as) certificate and then you will need to incorporate your insurance company to separate the business dealings from your personal assets. When you operate under just a DBA certificate, then you are personally liable for any lawsuits that the company may be hit with, but with incorporation, your business becomes its own entity and the threat of lawsuits will not mean personal bankruptcy for you. Have your attorney assist you with incorporating your business.
Personal Licenses
You will need to become licensed as an insurance agent in all of the states that you intend to work in. There is a series of licenses you need to obtain, including a securities trading Series 7 license, a life and health insurance license and an agent's license for each state in which you will work. Contact the insurance board for each state and find out what your licensing requirements will be and what tests you will need to take to conduct business.
Company Licenses
According to StartUpBizHub.com, you will need to have your insurance company licensed with each company for whom you sell insurance. This is licensing on top of your personal insurance licenses, and each state likely will cost at least $100,000 to become licensed as an insurance provider. You will also have to show proof that you have at least $1 million in liquid assets to start your insurance business in any part of the country, and that needs to be in place before applying for your state insurance company licenses.
